UAE: DAFZ launches ‘Talent Pass’ licence

Alroeya, 9 January 2022: The Dubai Crown Prince and Chairman of Dubai Executive Council has issued directives to launch a Talent Pass licence by Dubai Free Zone “DAFZ”.

The licence will be for economic activities related to freelancing and economic activities which are related to the media, education, technology, art, marketing, and consultancy operations operated by qualified individuals.

The licence will be available to all individuals from around the world who have specialised skills to help group the business environment in the free zone and strengthen the position of Dubai as hub for innovators and gifted individuals.

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Cybercrime: Business Email Compromise and the Quincecare Duty of Care

Business Email Compromise

Business email compromise is a form of cyber fraud whereby a hacker targets and obtains access to a business email account, imitates the business and emails fraudulent payment requests to the hacked company’s bank.     

Quincecare Duty of Care (‘Quincecare’) 

In the 1992 case of Barclays Bank plc v Quincecare Ltd the English courts found that a bank owes an implied contractual and co-extensive tortious duty of care to act with reasonable care and skill when performing a customer’s instructions, and not to act on those instructions where it believes the instructions will facilitate a fraud on the account holder.  

The Quincecare duty has been developed and upheld: the UK Supreme Court upheld a claim for damages under the duty in the case of Singularis Holdings Ltd (in liquidation) v Daiwa Capital Markets Europe Ltd [2019] UKSC 50, and the English Court of Appeal held that in certain circumstances banks may be required to investigate the payment instruction.  

What happened?

We recently acted on a matter that involved the Quincecare duty. Our claimant client was a shipping logistics provider specialising in transporting raw materials for use in the steel making industry. The defendant opponent was our client’s bank based in the DIFC.

It was not in dispute that the claimant was the victim of a cyber hack. Via a phishing email the hackers were able to access and take control of the claimant’s systems, forge invoices and send fraudulent payment instructions to the bank, on which the bank acted and paid out monies to the fraudster.

It was the claimant’s case that there were a number of red flags in the fraudulent instructions that put the bank on inquiry, and that the bank’s failure to spot these and  execute  the fraud resulted in it breaching its Quincecare duty.

The bank argued that it was under no obligation to inquire as to the purpose of any transfer seemingly authorised by instruction nor to  identity  the transferee. It also sought to argue that that there was a difference between whether payment out was made from funds owed by a bank to its customer, or from funds which the bank had agreed to advance to its customer on overdraft.

The question before the DIFC court was, in the emerging domain of business email cyber fraud, who was to bear the loss, the customer or the bank? The answer was fact-specific.

What was decided?

The DIFC court noted the number of red flags in connection with the fraudulent instructions, not least that the fraud did not follow the established payment request procedure of the parties and that the purpose of the payments was outside of the claimant’s normal business and mandate.

The DIFC court found that the bank had reasonable grounds for believing that the payment instructions were an attempt to misappropriate the customer’s funds. It also found that the bank did owe a Quincecare duty of care to its customer/the claimant  to refrain from paying out on fraudulent payment instructions where it had such reasonable grounds to believe it was an attempt to misappropriate the money.

It further found that the duty bites  at the time of compliance with the instruction to the bank to pay out, and that the claimant was equally harmed whether it was its own money or the bank’s money (i.e. an overdraft).

The court dismissed the bank’s argument that the claimant was contributorily negligent for failing to ensure that his email systems were secure.

Why is this significant?

The DIFC court found overwhelmingly in favour of our claimant client and ordered that it did not have to repay to the bank the misappropriated funds, and that the bank pay damages in consequential losses and costs on the basis that the claimant was wholly successful.  

Given the common law precedent of the DIFC courts, financial institutions in the DIFC should be aware of the judgment and the application of the Quincecare duty of care in this jurisdiction.

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UAE: Dubai World Trade Centre to Become a Zone Supporting Virtual and Crypto Assets

Alroeya, 20 December 2021: It has been announced that Dubai World Trade Centre will be turned into a comprehensive zone that supports the organisation and supervision of virtual and crypto assets.

This will include their products, digital exchange, and operators of these products in Dubai.

The aim is to reflect Dubai’s wish to create new approaches in the economic and financial sectors which will help attract talent and those who work in promising areas of this specialisation.

The Dubai World Trade will work with the private sector and other relevant bodies to build a legislative and supervisory system for digital assets. For full story, click here.

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UAE: Changes to Film Editing

The National, 19 December 2021: Films with adult content will no longer undergo editing or changes in the UAE, following the introduction of a new 21 age rating in cinemas.

The UAE Media Regulatory Office has stated that screenings will be shown without editing of their original “international version”.

However, Cinemas will have to adhere strictly to the new age rating, which requires proof of ID that a person is over 21.

Though most international releases are allowed to be shown in the Emirates, it is common for films with adult themes to have certain scenes edited out.

Up until now the highest age rating for films was 18, and relatively few releases came under this classification.

Editing of films has been largely restricted to films shown in cinemas. Material shown on home streaming services or airlines has rarely been edited.

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UAE: Penalties for Impersonation and Defamation of Others Confirmed

Alroeya, 16 December 2021: Lawyer and legal researcher Khaled Al Mazmi has clarified the penalties which will be imposed on those who impersonate and defame others.

The penalties will be imposed in line with Federal Decree-Law No. 34/2021 which will come into force on 2 January 2022.

For full story, click here.

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UAE: Dubai International Financial Courts to Establish Digital Economy Court

Alroeya, 14 December 2021: The Dubai International Financial Centre Courts have announced they are launching a court which will specialise in digital economy issues.

It will specialise in dealing with national and international disputes related to current and updated technologies in various area including big data, Blockchains, Artificial Intelligence and cloud services to disputes related to uninhibited air vehicles, 3D printing and robots.

The Courts are in the process of appointing leading judicial experts to operate and supervise the digital infrastructure and advanced service capabilities of the Court. It will start providing services in the first quarter of next year.

It will support specialist divisions in existing courts including the Technology and Construction Division and the Arbitration Division.

Early next year, the new court will assign a group of international lawyers and industry experts to draft and approve new rules for the Court. A 30-day consultation on them will be launched and they will then be issued.

The aim is to simplify and settle all complex commercial and civil disputes related to the international digital economy. For full story, click here.

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