DIFC: Reinforces Common Law Foundations and Enhances Real Estate Regulations

The Dubai International Financial Centre (DIFC) has enacted significant amendments to DIFC Law No. 3/2004 on Application of Civil and Commercial Laws and DIFC Law No. 10/2018, DIFC Real Property Legislation.

These changes solidify DIFC’s position as a leading international common law jurisdiction and enhance the regulatory framework for real estate transactions within the financial centre.

New Articles 8A and 8B has been added to the Application Law.

Article 8A of DIFC Law No. 3/2004 establishes that DIFC Law is determined first by DIFC statutes and court judgments, supplemented by the common law principles and rules of equity from England and Wales, as well as other common law jurisdictions.

Article 8B of DIFC Law No. 3/2004 states that interpretation of DIFC statutes may be guided by principles developed in analogous laws in established common law jurisdictions and international jurisprudence for model laws adopted by DIFC.

Real Property Law and Regulations Amendments: Introduction of a 0.25% Mortgage Registration fee based on the value of the mortgage being registered.

Extension of the registration period for Off Plan Sales from 30 days to 60 days, providing more time for purchasers to register transactions and pay the Freehold Transfer Fee.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit https://www.lexis.ae/lexis-middle-east-law/.

DIFC: Residents, Investors Can Now Register Wills for Digital Assets

Khaleej Times, 15 October 2024: The Dubai International Financial Centre (DIFC) Courts has launched ‘digital assets will’ which allows owners to distribute their digital assets using a non-custodial wallet.

This wallet enables individuals to reallocate assets to desired beneficiaries within their wallet and maintain full control over mobilising assets in and out during their lifetime, with assets ultimately distributed as ‘specific gifts’.

Investors and residents can access this service from anywhere globally and connect via video link to a compliance officer in Dubai.

This initiative was announced during the second day of the five-day Global Gitex 2024 edition at the Dubai World Trade Centre.

The digital assets industry has experienced exponential growth in the UAE and worldwide due to new technology and asset classes.

The new will template joins the DIFC Courts’ existing legacy will types, including full will, property will, financial assets will, business owners will, and guardianship will.

An online automated will be drafting service and a virtual registry provide a 360-degree digitally accessible service, allowing domestic and overseas individuals to create and register a DIFC Courts will.

The digital format assets recognised by the wallet include ETH, BTC, MATIC, USDC, USDT, and HBAR, with more to be included in the future.

The wills can also be added to the global digital vault, tejouri, functioning as a cloud vault and online safe for data, supported by a state-of-the-art DIFC data centre and a UAE-based backup data centre.

Access to all data is restricted to the ‘vault holder’ and the listed intended recipients.

Additionally, the DIFC Courts have launched a notary service, the first UAE service dedicated to notarising English documents, offering automated self-service, live virtual system, and in-person options.

Users can use an authentication service through primary source verification (PSV), with electronic or physical stamps and seals issued for each document.

Notarised documents will be verified using advanced cryptographic methods powered by Hedera Blockchain.

Additionally, a new alternative dispute resolution avenue, the Mediation Service Centre, will enable parties to negotiate dispute resolution with the help of DIFC Courts Part III registered mediators.

Parties can choose mediators, agree on fees and terms, and conduct mediation meetings online using the AI-enabled Court Management System (CMS) or in-person at the DIFC Courts premises.

The new suite of services was launched with support from The Hashgraph Association, Deca4 Advisory, and DataFlow Group, utilising Hedera technology and Primary Source Verification (PSV) solutions.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit https://www.lexis.ae/lexis-middle-east-law/.

DIFC: Case Management System Upgrade

The DIFC Courts will be upgrading its digital infrastructure with the implementation of a new, improved and streamlined Case Management System (CMS).

The new system implementation will take full effect as of 30 September 2024.

As a result, all DIFC Courts eServices will be suspended as of 4:00 pm on 26 September 2024, until 8:00 am on 30 September 2024.

Services affected during this system transition will include but are not limited to all filings (including claim forms and electronic filing cover sheets), payments of fees, Wills Registry, and bundling services.

Any deadlines that fall within the above stipulated period will be rescheduled to fall on 30 September2024.

Following the launch of the new system, all registered DIFC Courts users will be required to update their respective profiles via a link, which will be shared upon the launch of the upgraded system.

For any urgent applications to be made within the above stipulated period, please contact the Registrar on +971 50 213 8049.

For any further information, please contact the Registry via email: registry@difccourts.ae.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit https://www.lexis.ae/lexis-middle-east-law/.

DIFC: Proposed Changes to Real Property Law and Regulations

The DIFC has announced a consultation on proposed changes to the DIFC Real Property Law (DIFC Law No. 10/2018) and the DIFC Real Property Regulations 2020.

The consultation is of interest to those purchasing or intending to purchase Off Plan Lots within the DIFC, those purchasing a property with a Mortgage, or entering into Leases of property within the DIFC.

Key proposed changes include increasing the period to Register an Off Plan Sale in the Off Plan Register from 30 days to 60 days. The could also be a clarification of the timeline of when an Off Plan Sales Agreement can be terminated by a Prospective Owner should a Developer fail to provide a Disclosure Statement after the parties have entered into an Off Plan Sales Agreement.

Article 156(4) of DIFC Law No. 10/2018 currently requires a Developer to lodge for Registration each Off Plan Sale in the Off Plan Register no later than 30 days after the entering into of an Off Plan Sales Agreement with the Prospective Owner. Any type of reservation form or similar (which is often used at the launch of Off Plan Sales to secure interest in a Lot) where a sum of AED 5,000 or more is received by a Developer is caught within the definition of an Off Plan Sales Agreement. Therefore, the current 30-day period for Registration runs from the effective date of such a form or agreement. However, in practice it may take longer than 30 days for a Prospective Owner to sign the final Sale and Purchase Agreement, once received from the Developer which is why there has been a proposal to extend the time period for registration of an Off Plan Sale to 60 days to cater for this.

Article 160(1) of DIFC Law No. 10/2018 requires Developers to provides Prospective Owners with a Disclosure Statement before the parties enter into an Off Plan Sales Agreement. This generally outlines details of the Off Plan Development including community amenities, service charge details and finishes of Lots. Article 160(6) of DIFC Law No. 10/2018 permits a Prospective Owner to terminate an Off Plan Sales Agreement at any time prior to the date of handover of the Lot being purchased, if a Developer has failed to provide a Disclosure Statement. .However, the DIFCA believes the period within which this right of termination can be actioned is currently too long, and could potentially lead to Prospective Owners terminating the agreement at the last minute for reasons which were unrelated to the receipt of a Disclosure Statement. The DIFCA still feels it is important for these Disclosure Statements, to be provided but also believe it is necessary to strike the correct balance between the rights of Prospective Owners and Developers and the need to avoid unequitable results created by an arbitrary termination of Off Plan Sales Agreements.

If a Developer does provide a Prospective Owner with a Disclosure Statement after the parties have entered into an Off Plan Sales Agreement, a Prospective Owner will have a period of 60 days to review this from the date of receipt. During this period of 60 days and for a further 20 days after that period, Prospective Owners can elect to terminate an Off Plan Sales Agreement if they decide that the Disclosure Statement does not accurately reflect the Off Plan Development. Article 160(6) of DIFC Law No. 10/2018 has been clarified to make it clear that such termination is only effective if exercised “within 20 days of the expiry of the 60-day review period.

Another proposed change is to introducing a Mortgage Registration Fee in the DIFC based on the Mortgage amount, in line with the fee that applies onshore in Dubai and charging a standard lodgement fee of $100 for all Mortgage Instruments which are being Registered in the DIFC (and $273 for Islamic Mortgages) . At present under onshore Dubai laws, a fee of 0.25% of the mortgage amount is levied by the Dubai Land Department to register a mortgage .

The DIFCA has proposed to introduce a Mortgage Registration Fee to the DIFC Real Property Regulations to match the onshore 0.25% of the mortgage amount. It is also proposed that the lodgement fee for both Islamic and non-Islamic Mortgage Instruments would be charged to a flat rate of $100. The DIFCA is not proposing to add a period within which a Mortgage must be registered as it will be in the interest of the Mortgagee to Register the Mortgage if they wish to protect its interest on the Register.

In addition, an increase in the period to Register a Lease with the RORP has also been from 20 days to 30 days has also been proposed (see Article 49(1) and 49(3) of DIFC Law No. 10/2018 in order to ensure that Lessors have sufficient time to Register the Lease and pay the Lease Registration fee. Article 49(1) of DIFC Law No. 10/2018 requires a Lessor to lodge for Registration a Lease registrable under Article 48(3) of DIFC Law No. 10/2018, within 20 days of the date on which the Lease was entered into by the Lessor and the Lessee. However, feedback has been received from Lessors and Lessees that 20 days is often too short a timeline to Register a Lease especially in cases where the Registered Owners that are overseas which is why this extension has been proposed.

The removal of the requirement for parties to Instruments to have an address for service of notices in the UAE, and there to be a statement a person’s address as shown in any Instrument in which that person first lodges for Registration is treated as the person’s address for service by the RORP has been proposals. Email would also be added as a valid mode of service of notices under Article 169 of DIFC Law No. 10/2018.

Article 169(3) of DIFC Law No. 10/2018 sets out the modes of service which are permissible under DIFC Law No. 10/2018. However, the DIFCA now believes it is not necessary for parties to Instruments to provide a UAE address for service, given the number of foreign purchasers there area in the DIFC which is why it has been proposed to remove the requirement for parties to Instruments to have an address for service of notices in the UAE. It has also been proposed that Article 169(2) of DIFC Law No. 10/2018 should be deleted and Article 127(1) of DIFC Law No. 10/2018 should be expanded to include that an address for service on the first Instrument Registered by a person is the valid address for service of notices until an application is made to amend the Register. This would ensure that parties to Instruments were aware that the insertion of a different address in a second or subsequent Instrument did not constitute a change in the valid address for service Registered with the RORP.

There has also been a proposed alteration to the definition of Prescribed fee DIFC Law No. 10/2018. DIFCA believes this definition was always supposed to mean the lodging fee for an Instrument with the RORP and that the current definition has created some anomalies in DIFC Law No. 10/2018. Therefore, they propose to amend the definition to mean only the lodging fee for an Instrument.

The consultation ends on 2 August 2024.

For more news and content, try Lexis Middle East. Click on lexis.ae/demo to begin your free trial of Lexis® Middle East platform.

You can also explore the legal landscape by subscribing to our Weekly Newsletter.

Want to learn more about Lexis® Middle East? Visit https://www.lexis.ae/lexis-middle-east-law/.