Draft of the Law Relating to Application of DIFC Laws
Part 1: General
The Law may be cited as "the Law Relating to Application of DIFC Laws No. I of 2003".
2. Legislative authority
The Law is made by the Chairman in accordance with the authority given to him by Dubai Law No. 3 of 2002.
3. Application of the Law
The Law applies in the jurisdiction created under Dubai Law No. 3 of 2002.
4. Date of enactment
The Law is made on [insert date of enactment].
The Law comes into force on the date that the Law is enacted.
Schedule I contains:(a) interpretative provisions which apply to the Law; and(b) a list of defined terms used in the Law.
Part 2: Scope
7. Limitation on scope(1) The Law shall not apply to:(a) rights and obligations under negotiable Instruments to the extent such rights and obligations arise out of their negotiable character;(b) any question of capacity or authority of natural persons, Bodies Corporate or other organisations;(c) any question of capacity or authority of an agent not appointed under a contract; or(d) any rights or obligations arising from the creation or winding up of a Body Corporate or other organisation.(2) In relation to any matter which under this Law is governed by the law of another jurisdiction, any rule of the law of that jurisdiction applying the law of another jurisdiction in relation to that matter shall be disregarded.
Part 3: Applicable Law Of Contracts
8. Governing law
The existence, validity, effect, interpretation and performance of a contract, or any term thereof, including any requirements as to formality, shall be determined by the law which governs it.
9. Effectiveness of express choice of governing law
An express choice of a governing law in a contract shall be effective against all persons affected thereby.
10. Absence of express governing law
If the parties do not specify the governing law of a contract, the contract shall be governed by the law of the DIFC if any party to the contract is a licensee acting in its capacity as such.
11. Agency(1) Where an agent is appointed under a contract, the capacity and authority of the agent shall be determined by the law which governs the contract.(2) Where an agent contracts on behalf of a principal, the rights and liabilities of the principal as regards third parties shall be governed by the law which governs the contract between the agent and the third party.
12. Governing law of right of subrogation
Where a Person (the "creditor") has a contractual claim upon another (the "debtor"), and a third party has a duty to satisfy the creditor, or has in fact satisfied the creditor in discharge of that duty, the law which governs the contractual claim shall determine what extent to which the third Person is entitled to exercise against the debtor the rights which the creditor had against the debtor under the law governing the contractual claim.
Part 4: Submission To Jurisdiction In Contracts
13. Effectiveness of express submission to jurisdiction or arbitration(1) A submission to the courts of a jurisdiction in a contract shall be effective.(2) A submission to arbitration in a contract shall be effective.
Part 5: Property
14. Law governing rights in property
Subject to Article 16, the law of the jurisdiction where Property is located governs:(a) the classification of the Property as real Property or personal property; and(b) the validity and extent of interests in the Property.
15. Law governing validity of transfer of property(1) Subject to Article 16, the law of the jurisdiction where Property is located governs:(a) the validity of transfer of the property;(b) the effect on the proprietary rights of the parties thereto and of those claiming under them in respect thereof.(2) Where Property is in transit or its location is not known, the validity of a transfer is governed by the law governing that transfer.
16. Securities(1) The law of an issuer's jurisdiction governs:(a) the validity of a security;(b) the rights and duties of the Issuer with respect to registration of transfer;(c) the effectiveness of registration of transfer by the issuer; and(d) the validity and extent of any third party Property interest in a Security.(2) The law of a Securities intermediary's jurisdiction governs:(a) acquisition of a Security entitlement from the Securities intermediary;(b) the rights and duties of the Securities intermediary and entitlement holder arising out of a Security entitlement; and(c) the validity and extent of any third party Property interest in a Security entitlement.(3) The law of the jurisdiction in which a Security Certificate is located at the time of delivery governs the validity and extent of any third party Property interest against a Person to whom the Security Certificate is delivered.(4) For the purpose of this Article an "issuer's jurisdiction" is the jurisdiction under which the Issuer of the Security is organised or, if permitted by the law of that jurisdiction, the law of another jurisdiction specified by the Issuer.(5) For the purposes of this Article a "securities intermediary's jurisdiction" is:(a) the jurisdiction in which the Securities account is expressed to be maintained in the agreement governing, if any;(b) if paragraph (a) does not apply, the jurisdiction in which the office identified in an account statement as the office serving the entitlement holder's, account is situated; failing which(c) the jurisdiction in which head office of the Securities intermediary is situated.
Part 6: Trusts
17. Recognition of trusts(1) A trust which is:(a) expressly constituted under the law of another jurisdiction; or(b) created by the law of another jurisdiction.shall be recognised as a trust.(2) The existence, validity and interpretation of a trust constituted in accordance with Article 17(1)(a) shall be determined by the law under which the trust is constituted.(3) For the purpose of this Article, the law under which the trust is constituted shall be:(a) in the case of a trust recognised under Article 17(1)(a) the law set out in the Instrument constituting the trust; and(b) in the case of a trust recognised under Article 17(1)(b) the law of the jurisdiction by whose law the trust is created.
Schedule 1: Interpretation
1. Rules of interpretation(1) In the Law, a reference to:(a) a statutory provision includes a reference to the statutory provision as amended or re-enacted from time to time;(b) a Person includes a reference to a government, State, State agency, corporation, Body Corporate, association or partnership; and(c) a calendar year shall mean a year of the Gregorian calendar.(2) The headings in the Law shall not affect its interpretation.
2. Defined terms
In the Law, unless the context indicates otherwise, the defined terms listed below shall have the corresponding meanings:
Term Definition Bank a Person who in the ordinary course of business receives Deposits or other repayable sums from the public Commodity account means an account maintained by a commodity broker in which a commodity contract is carried for a commodity customer Commodity broker a Person who in the course of his business transacts commodity contracts or provides clearance or settlement services relating to commodity contracts Commodity contract a commodity Futures contract, an option on a commodity Futures contract, or a commodity option Commodity customer a Person for which a commodity broker carries a commodity contract on its books DIFC the Dubai International Financial Centre, established under Article 3(l) of Dubai Law No. 3 of 2002 Entitlement holder a Person identified in the records of a Securities intermediary as the Person having a Security entitlement against the Securities intermediary Financial asset has the meaning set out in the Personal Property Law Intangible a thing other than a tangible thing Jurisdiction includes the jurisdiction of the DIFC Law the Law Relating to Application of DIFC Laws No. I of 2003 Licensee any Person or organisation which is licensed by the DIFC to carry on business Personal property any Property other than real property Personal Property Law Personal Property Law No. 1 of 2003 Purchaser a Person who has acquired or is in the process of acquiring title (whether contingent or absolute) to any Property other than as a recipient of a gift or other voluntary transfer Real property any right or interest in land Schedule means a schedule to the Law Securities account an account to which a financial asset is or may be credited in accordance with an agreement under which the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset Securities intermediary a Person who in the ordinary course of his business transacts Securities or other financial assets Security an obligation of or interest in an Issuer or in Property which is represented by a Security Certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer Security certificate a Certificate representing a Security, the delivery of which is capable of transferring title to that security Security entitlement the rights of an entitlement holder with respect to a financial asset Security interest an interest in personal Property which secures payment or performance of an obligation Share a Security which represents any interest in the capital of any enterprise which is characterised by the law of the place of incorporation or establishment of that enterprise as a share Trust the legal relationship created by a settler which assets are placed under the control of a trustee for the benefit of a beneficiary or for a specific purpose Uncertificated security a Security that is not represented by a Security certificate
3. Location(1) For the purpose of Part 5 of the Law, the location of Property shall be determined in accordance with this paragraph 3.(2) Subject to paragraphs 3(3), (4) and (5), location means:(a) in relation to a tangible thing, the jurisdiction in which the tangible thing is; and(b) in relation to an intangible, the jurisdiction in which the right to the intangible can be enforced or recovered.(3) The location of a merchant ship or aircraft is the jurisdiction in which it is registered.(4) The location of a debt held in a Bank is:(a) the jurisdiction in which the Deposit account is expressed in the agreement to be maintained, if any;(b) if paragraph (a) does not apply, the jurisdiction in which the office identified in an account statement as the office serving the customer's account is situated; failing which(c) the jurisdiction in which the head office of the Bank is situated.(5) The location of a commodity account is:(a) the jurisdiction in which the commodity account is expressed to be maintained in the agreement governing the relationship between the commodity broker and the commodity customer, if any;(b) if paragraph (a) does not apply, the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is situated; failing whichthe jurisdiction in which the head office of the commodity broker is situated.