DUBAI: LAW OF OFFSHORE

On this Page:

- DUBAI TABLE OF STATUTES
- DUBAI INTELLECTUAL PROPERTY LAW
- DUBAI E-COMMERCE LAW
- DUBAI MONEY-LAUNDERING LAW
- DUBAI BANKING LAW
- DUBAI INTERNATIONAL FINANCIAL CENTRE

Dubai Table of Statutes

This is a non-exhaustive list of the main Dubai statutes affecting offshore and non-resident business. The statutes are listed in date order - click on the statute for a fuller description of the statute or the legal regime it forms part of.

Federal Law No 8 of 1984 (Companies law)
Federal Law No. 9 of 1975 (Registration of professionals)
Federal Law No 10 of 1980 (Central Bank law)
Federal Law No 12 of 1986 (Labour law)
Federal Law No 13 of 1988 (Commercial companies law)
Federal Law No 37 of 1992 (Trademarks)
Federal Law No 40 of 1992 (Protection of intellectual property)
Federal Law No 44 of 1992 (Protection of industrial property)
LAW NO. (1) OF 2000 OF DUBAI TECHNOLOGY, ELECTRONIC COMMERCE & MEDIA FREE ZONE
Federal Law on Criminalisation of Laundering of Property Derived from Unlawful Activity, No 4 of 2002
Private Companies Regulations For Free Zone Limited Liability Companies
Federal Decree No 35 (Establishing the DIFC as a Financial Free Zone)
Employment Law No 4 of 2005
Law Of Obligations No 5 of 2005
Implied Terms In Contract And Unfair Terms Law No 6 of 2005
Law Of Damages And Remedies No 7 of 2005
Law Of Security No 9 of 2005
Personal Property Law No 9 of 2005
Law Relating To The Application Of DIFC Laws (Amended And Restated) No 10 of 2005
Companies Law: DIFC Law No 3. of 2006
Limited Partnership Law: DIFC Law No 4. of 2006

Dubai Intellectual Property Law

In 1992, the UAE passed three laws pertaining to intellectual property: a copyright law, a trademark law, and a patent law. The UAE began enforcing the copyright law on September 1, 1994. The government began registration of trademarks and patents in 1993.

Patents: Federal Law Number 44 protects new inventions, original improvements, new concepts, trade secrets and industrial know-how, industrial patterns and designs. The Ministry of Finance and Industry houses the patent office.

Trademarks: Federal Law Number 37 regulates trademarks. The UAE has a trademark office in the Ministry of Economy and Commerce which is accepting registration applications.

The trademark law provides protection for 10 years, with possible renewal options. Owners of registered trademarks have the right to file legal actions in UAE courts in cases of infringement. The courts are empowered to attach, seize, destroy or re-export counterfeit goods. Criminal penalties can include fines and/or imprisonment.

In 2003, the UAE Ministry of Economy and Commerce invited industry to launch an Intellectual Property Rights (IPR) forum in the UAE.

The UAE laws prohibit using illegal software in IT applications and require companies to provide adequate proofs on the usage of original software. According to the findings of the eighth annual BSA Global Software Piracy Study for the year 2002, UAE's leading anti-piracy role in the region for the seventh consecutive year has resulted in the decrease in piracy rates from 86% in 1994 to 36% in 2002.

The UAE Ministry of Economy and Commerce has also begun to strengthen the working of the trademarks committee and is beginning to look into the various proposals sent to this body besides preparing a list of investigators in order to enhance the implementation of the laws.

In September 2005, it emerged that the UAE was reviewing its intellectual property protection legislation.

The review took place in anticipation of a free trade agreement (FTA) with the United States.

Speaking to the regional media at the time, the director of Dubai Media City (DMC), Mohammad Al Mulla confirmed that:

"It (the IP regime) is still under review and will be updated in line with and under the framework of the FTA agreement with the US. Once the updates come into effect, it will have an impact on the country's overall business activities, including the media."

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Dubai E-Commerce Law

LAW NO. (1) OF 2000 OF DUBAI TECHNOLOGY,
ELECTRONIC COMMERCE & MEDIA FREE ZONE

Article (1)

This Law shall be known as "Dubai Technology, Electronic Commerce and Media Free Zone Law No. (1) of 2000".

Article (2)

The following words and phrases shall have the following meaning appearing opposite each of them, unless the context implies otherwise.

Article (3)

There shall be established by this Law:

a) a free zone to be known as Dubai Technology, Electronic Commerce and Media Free Zone, which location, area and boundaries shall be as set out in the map attached to this Law.

b) a corporate entity known as Dubai Technology, Electronic Commerce and Media Free Zone, which shall be financially and administratively independent and may sue or be sued in this capacity. Its main premises shall be in the Free Zone, and it shall be part of the Government.

Article (4)

The Free Zone Authority shall be constituted of:

a – a chairman
b – a director general
c – an executive body.

Article (5)

The Chairman shall be appointed by the Ruler, and shall undertake the supervision of the Free Zone. The Chairman shall have the power and authority to issue rules and regulations necessary for the operation and administration of the Free Zone, and for the implementation of this Law.

Article (6)

The Director General shall be appointed by the Ruler, and shall undertake the administration of the Free Zone, under the supervision of the Chairman in accordance with the provisions of this Law and the rules and regulations issued in relation thereto and shall represent the Authority towards third parties.

Article (7)

The Chairman shall issue a special regulation governing the recruitment and appointment of employees of the Authority’s Executive Body, and the terms and conditions of their employment, dismissal, salaries, duties, rights and other matters involving them.

Article (8)

The objects of the Authority shall be:

a - to draw up strategies and policies, and methods of implementation thereof, in order to promote Dubai as a center for Technology, Electronic Commerce and Media.

b- to prepare researches and advise the Government in relation to laws appropriate to the regulation and encouragement of Technology, Electronic Commerce and Media in the Emirate, including but not limited to:

1 – data protection

2 - protection of intellectual property right.

3 - control of crimes associated with Electronic Commerce

c - to establish, own and promote, either solely or with others, establishments in the Free Zones, including but not limited to, a University and a research centre.

d - to co-ordinate with the other Free Zones in relation to matters of mutual interest.

Article (9)

To achieve its objects, the Authority shall undertake the following functions and responsibilities:

1 - procure infrastructure, buildings, management and any other services required to achieve the Authority’s objects.

2 - regulate business and activities within the Free Zone.

3 - provide telecommunications and Internet services.

4 - authentication of Internet and Electronic Commerce sites and issuing of the necessary terms and conditions in relation thereto. The Authority may also license other establishments within the Free Zone to perform the authentication process of such sites.

5 - establish and license establishments in the Free Zone.

6 - regulate commerce between establishments in the Free Zone and any other parties outside the Free Zone..

7 - enter into agreements with other Free Zones to enable the Free Zone establishments to carry on business in those other zones.

8 - provide the Free Zone establishments, upon request, with executives, managers technicians, craftsmen and other workers in accordance with the provisions of this Law, the regulations issued in relation thereto, and any terms and conditions agreed upon by the Authority and these establishments.

9 - enter into leases of plots and buildings that may extend to periods up to (50) years, with any establishment in the Free Zone, to enable it to carry on its activity according to terms and conditions agreed upon.

10- provide of all kinds of services.

11- levy and charge fees for the services it provides.

12- establish an investment fund for providing capital to the Free Zone establishments, and for investing the Authority’s funds in the manner and method, and in the activities and projects, which the Chairman deems fit.

Article (10)

The business and activities carried on in the Free Zone shall include the following:

1 - the design, development, use and maintenance of everything relevant to Information Technology .

2 - business of Electronic Commerce

3 - Telecommunications and media services

4 - provision of services through the Internet or through any other medium including banking, financial services, insurance, education, call centres, marketing operations, information and recreation services .

5 - integrated marketing and public relations services.

6 - assembly and packaging of products manufactured within or outside the Free Zone.

7 - import, export and storage of products.

8 - the development and manufacture of products.

9 - warehousing, logistics, distribution and redistribution services.

Article (11)

Subject to the provisions of Article (23) of this Law and the regulations issued in relation thereto, the Free Zone shall be open to all kinds of products from all sources, whether local or foreign.

Article (12)

The products brought, manufactured, produced or developed in the Free Zone shall be exempt from customs duties, and shall not be subject to any customs duties or any other fees when exported.

Article (13)

Products kept in the Free Zone, used in any process, or integrated in the manufacturing of any product in the Free Zone shall be exempt from customs duties.

Article (14)

Products exported from the Free Zone to the "Customs Zone" in Dubai shall be deemed to have been exported from abroad for the first time, and shall be subject to customs duties.

Article (15)

Free Zone establishments and employees shall be exempt from all taxes including income tax with regard to their operations within the Free Zone. They shall also be excluded from any restrictions on repatriation and transfer of capital, profits or wages in any currency to any place outside the Free Zone for a period of (50) years. This period may be renewed for further similar periods by a resolution issued by the Chairman. Such period shall be calculated from the date of the beginning of work of such establishments or employees.

Article (16)

Assets or activities of the Free Zone establishments shall not be subject to nationalization or any measures restricting private ownership, throughout the period of their activities in the Free Zone.

Article (17)

Free Zone establishments may employ or hire whomsoever they choose in their operations in the Free Zone, provided that such employees are not subject to any countries politically or economically boycotted by the UAE.

Article (18)

The operations of Free Zone establishments or employees, within the Free Zone, shall not be subject to the laws and regulations of Dubai Municipality, the Department of Economic Development of the Government of Dubai, or the powers and authority falling within their jurisdiction.

Article (19)

Companies with limited liability may be incorporated in the Free Zone in accordance with the Free Zone Regulations, and shall be considered as Free Zone establishments. These companies may have one or more shareholders, whether natural or corporate persons, local or foreign.

Article (20)

The Authority shall have the power to approve the establishment and registration of the Free Zone establishments, and to regulate all procedures and matters relating thereto, including incorporation and registration of companies referred to in Article (19), levying registration fees, setting out terms and rules governing such companies, regulations regarding their liquidation or any other matters as the Authority deems necessary for the proper supervision and control of such companies.

Article (21)

Every limited liability company incorporated in accordance with Article (19) of this Law, shall set out beside its name the following particulars, in all its activities, contracts, notices invoices, correspondence and publications:

a) that the company is incorporated in accordance with this Law, and that it is a limited liability company.

b) that it is a company in the Free Zone.

in the cases where clause (a) and/or clause (b) of this Article are disregarded, the company’s owner or owners shall be personally liable for the obligations of the company.

Article (22)

The Chairman, the Director General or the employees and workers of the Authority shall not be liable to any third party for the operations or obligations of the Free Zone Establishments or their employees.

Article (23)

The following products, goods and services shall be prohibited in the Free Zone:

a) goods and services in violation of intellectual property law, including those in violation of laws and rules relevant to trademark, patent, copyright and design rights.

b) products boycotted by the UAE

c) all goods, products and services prohibited under the laws in force in the Emirate and/or the UAE.

The Authority shall have power to specify or amend the list of prohibited products and services in accordance with the laws of the Emirate, as well as the power to grant exemptions from such prohibitions.

Article (24)

The following activities shall be prohibited within the Free Zone:

a - any unlicensed activity by any natural or corporate person, which requires a license within the Free Zone:

b - any activity contrary to the Free Zone Regulations.

c – any willful activities designed to disrupt computer networks & software such as the creation and distribution of computer viruses.

Article (25)

Assignment of the license issued by the Authority, to another party, shall be prohibited without the prior written consent of the Authority.

Article (26)

The Authority shall have the power to control and inspect the activities of Free Zone establishments which are suspected to be in breach of the provisions of this Law or any other regulation.

Article (27)

The Ruler may establish a court and/or an arbitration tribunal with the jurisdiction of hearing claims and suits arising out of, or in connection with, activities carried out by Free Zone Establishments within the Free Zone, including claims and suits between these establishments and any other parties outside the Free Zone.

Article (28)

The Director General may impose civil penalties on any person who is in breach of any provision of this Law and the Regulations issued in relation thereto, or in breach of the terms and conditions of the license issued by the Authority, all in accordance with a special regulation to be issued by the Chairman.Following is an artist's impression of the proposed Dubai Internet City site plan. The site is located on Sheikh Zayed Road, next to the American University.This area overlooks the Emirates hills golf course development.

In May 2003, the Dubai Technology and Media Free Zone announced that the Private Companies Regulations for Free Zone Limited Liability Companies had been issued.

The regulation was designed to provide a comprehensive regulatory base for Free Zone Limited Liability companies, and further enhance the business environment that the Free Zone’s companies enjoy.

"We are confident that the new Regulations will provide a greater degree of certainty to our Business Partners who have formed Free Zone Limited Liability companies,” explained Ahmad Bin Byat, Director General of the Dubai Technology and Media Free Zone, at the time.

“The Private Companies Regulations have been developed as part of our commitment to ensure that our Business Partners can function within a legal framework that provides security for their investments and a means for effectively resolving conflicts,” he added.

Two other laws developed by the Free Zone’s legal department in conjunction with international agencies had already been accepted as Dubai Law at the time – the Facilitation of Electronic Transactions Law and the Electronic Crimes Law.

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Dubai Money-Laundering Law

The National Anti-Money Laundering Committee was formed in July, 2000, with representatives from Central Bank of UAE, Ministry of Interior, Ministry of Finance and Industry, Ministry of Justice, Islamic Affairs and Awqaf, Ministry of Economy and Commerce, the UAE Customs Council, the Secretariat General of Municipalities, the Federation of Chambers of Commerce and Industry.

In December 2001 the United Arab Emirates' Federal National Council (FNC) approved the long-awaited anti-money laundering draft law which will cover banking and financial activities in Dubai. After a long debate, FNC members approved the draft with minor amendments and those were mainly concerned with terms and the language used in the draft.

The promulgation of the Federal Law by the UAE authorities regarding the criminalisation of money laundering took place on January 22, 2002.

Any person who intentionally commits one of the acts in respect of property derived from any of the crimes listed in Article 2/2 of the Act is an offender under the Anti-Money Laundering Act.

Further, the conversion, depositing or transference of proceeds, for the purpose of concealing or disguising the illicit origin of such proceeds will be considered as a crime under the Act.

The law provides for jail terms of up to seven years and a fine ranging from Dh2,000 to Dh1 million, or both, in addition to freezing of property, depending on the nature of the crime.

The Federal Law on Criminalisation of Laundering of Property Derived from Unlawful Activity defines money laundering as any act involving transfer, conversion or deposit of property, or concealment or disguise of their true nature, knowing that such property is derived from any of the offences stated in Article 2:

The term freezing or seizure under the law means temporarily prohibiting the transfer, conversion or disposition of, or movement of property, on the basis of an order issued by the competent authority.

The law also stipulates permanent deprivation of property by order of a competent court of those found involved in money laundering offences.

Under the law, a Financial Information Unit has been established at the Central Bank to deal with money laundering and suspicious cases. Reports of suspicious transactions will be sent to the Unit from all financial institutions and other financial, commercial and economic establishments.

The law further stipulates that financial, commercial and economic establishments operating in the country will be criminally liable for the offence of money laundering if it is committed in their names or for their financial account.

In March, 2004, the UAE's stock market regulator stepped up the region's campaign against money laundering and terrorist financing. In a circular sent to the Abu Dhabi and Dubai stock exchanges, and to 25 stockbroking firms in the United Arab Emirates, the UAE Securities and Commodities Authority announced that: "You are requested to verify all information and documents when accepting cash or opening accounts for clients."

A UAE-based broker explained that: "You can say it is an official umbrella. Before, we did not have written instruction concerning money laundering. Most of us had refused to accept big amounts of cash before because we wanted to make sure the money is clean and legal. But now the process is more organised and clear as we have official instructions in this respect. You can say that we are now part of the campaign launched by the UAE against money laundering."

Earlier in the year, speaking during a two-day seminar on "Interrogation and Litigation in Money Laundering Crimes" at the Dubai Chamber of Commerce and Industry, American Consul General in Dubai, Jason Davis, praised the cooperation which exists between the United Arab Emirates and the United States with regard to anti-money laundering initiatives.

He suggested that Federal Law No. 4 (2002), which allows financial authorities to seize suspicious funds whilst investigations are taking place, gives the UAE the necessary edge when it comes to combating money laundering and terrorist financing, and highlighted the continued importance of working together and sharing intelligence and expertise.

"We are here today to educate and learn at the same time. We are always interested in benefiting from other people's expertise," he announced, revealing that officials from the US Department of Justice periodically attend similar seminars in the UAE for the purposes of discussion and exchange of information.

Speaking at a Global Banking Strategy Summit held in Dubai in April, 2004, Abdulrahim Mohamed Al Awadi, assistant executive director in charge of the UAE Central Bank's Anti-Laundering and Suspicious Cases Unit announced that the UAE is willing to provide assistance to other countries looking to draft new anti-money laundering legislation and to create financial intelligence units.

He also reiterated the commitment of the United Arab Emirates to its own anti-money laundering and terrorist financing campaign, and suggested that the jurisdiction has shown leadership in the region.

"Being in the vanguard in the global fight against money laundering and financing terrorism, the UAE is keen to share its experience with regulators from other jurisdictions," Mr Al Awadi told delegates.

Outlining initiatives put in place by the authorities in the United Arab Emirates, he revealed that: "The Central Bank of the UAE has set a ceiling of Dh40,000 for the amount that may be brought into the country in cash or equivalent without the need for declaration. A regulation has also been issued exclusively to money-changers to ensure that all outward remittances of Dh2,000 and above are duly documented with proper identification of customers."

The Central Bank official additionally revealed that under new rules issued by the Securities and Commodities Authority of the UAE, the settlement of transactions amounting to more than Dh40,000 is required to be properly documented, and the identity of the investor verified.

Meanwhile, in February 2005, Dubai Financial Services Authority (DFSA) signed two memoranda of understanding with the Isle of Man's Financial Supervision Commission and Insurance and Pensions Authority.

The two agreements aim to provide a framework for the provision of mutual assistance and information exchange between the two jurisdictions with regard to cross-border transactions. In addition, the agreements are designed to improve compliance, thereby helping to prevent money laundering and fraud.

Similar agreements have since been signed with a raft of jurisdictions, including Egypt, Germany, Greece, Guernsey, Iceland, Jersey, Luxembourg, New Zealand, the Netherlands, Malaysia, South Korea, Switzerland, and the United States.

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Dubai Banking Law

In the UAE, the marketing of financial products and services is regulated by the UAE Central Bank under Federal Law No. 10 of 1980 (the Central Bank Law and related banking resolutions). Enforcement of Central Bank policy, however, is often undertaken by the local licensing authorities in the various Emirates.

The Central Bank Law establishes five principal categories of institutions in the UAE - commercial banks, investment banks, financial establishments, financial intermediaries, and monetary intermediaries - all of which must be licensed by both the Central Bank and the local licensing authorities. In addition to these five categories, current practice in the individual Emirates permits the licensing of financial or investment consultants. These consultants are not required to obtain a Central Bank license.

Commercial Banks The Central Bank Law defines a commercial bank as any establishment which customarily receives funds from the public, grants credit and banking facilities, and conducts other banking operations prescribed for commercial banks either by law or by customary banking practice. In the UAE, customary banking practice includes the marketing and sale of investment products and services, including the sale of securities and various funds.

Central bank regulations announced on April 5, 1993, set the minimum capital to risk-weighted asset ratio at 10 percent, which is 2 percent higher than the minimum level recommended by the Basel Concordat committee on banking supervision.

Investment Banks Central Bank Resolution No. 21 of 1988 regulates the activities of investment banks. Investment banks are defined as merchant or development banks or banks which provide medium or long term financing. The Central Bank Resolution authorizes investment banks in the UAE to offer financial products and services, including the issuance of financial instruments and the management of investment portfolios.

On June 1, 1997, the Emirates Bank Group, which is controlled by the Dubai government, launched UAE's first mutual investment fund with an initial capital of about US$ 8.2 million. The fund offered non-UAE nationals their first opportunity to invest in the UAE's tightly restricted equity market up to a limit of DH 500,000. The huge response by foreign investors prompted the UAE Central bank to raise its original ceiling of 20 percent of foreign investment to 49 percent. When the fund closed for public subscription on June 15, 1997 the investment totaled to US$ 74.5 million.

Financial Establishments The Central Bank Law permits financial establishments to lend money and to undertake other financial transactions but does not allow them to accept deposits. The Central Bank has adopted a policy that prohibits financial establishments from offering financial products and services. In comparison to commercial banks, the only activity that financial establishments may undertake which commercial banks may not is the lease of equipment and machinery.

Financial Intermediaries Financial intermediaries are brokers. Regulations issued under the UAE Central Bank Law allow licensed brokers to market and to sell foreign and local shares and financial instruments in consideration for a commission. Local and foreign companies may obtain a brokerage license from the UAE Central Bank.

Monetary Intermediaries Monetary intermediaries are money changers. They are not authorized to market or to sell investment products and services.

Investment Consultants The UAE Central Bank has not published regulations on investment consultancy. Under the existing policies of the individual Emirates, a company licensed as an investment consultant may advise and assist clients in pursuing various investment strategies but may not directly sell investment products. Sales of investment products introduced by consultants are, therefore, typically booked outside the UAE. Consultants are also not expected to receive investment funds from clients, although they may assist in the transfer of those funds. Consultants may not provide credit facilities or open accounts for clients but may assist them in opening accounts with brokers and banks. If properly authorized by the client, the consultant could also manage such accounts.

The UAE Central Bank has recently moved towards a tighter policy regarding investment companies and financial consultants. In the future, such companies will have to obtain a license from the Central Bank and to report under the rules it has established. Investment Companies for the purpose of these regulations have been defined as undertakings which are involved in investment in securities or in the management of trust funds or investment portfolios on behalf of others. The minimum paid up capital for investment companies (including branches of foreign companies ) is DH 25 million, increasing to a larger amount depending on the activities of the company. Financial consultants, on the other hand, are deemed to be individual professionals or groups of professionals providing advice to individuals or companies about the value of securities and other financial instruments or giving recommendation about investing. For these, licenses can be issued with a minimum paid in capital of DH 1 million.

Many of the foreign banks in Dubai are established in the Dubai International Financial Centre and the Jebel Ali Free Zone.

Dubai could be said to be over-banked, and there is intense competition to offer technologically-advanced services - services on offer include mobile phone banking and Internet banking. With proposed plans to develop the UAE as a regional e-commerce centre and development of the Dubai Internet City, many banks are working on providing high-tech banking products and services.

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Dubai International Finance Centre

During 2002, the Dubai authorities developed plans for the Dubai International Finance Centre (DIFC), which was launched in 2003.

The DIFC published its proposed regulatory structure for consultation in June, 2003.

In July, 2003, the UAE Federal Cabinet approved a Federal Decree allowing the DIFC a large degree of sovereignty. The approval of the Decree, which allowed for Financial Free Zones to be established in the UAE, marked a significant step forward for the Centre, which hosted a summit between the World Bank and the IMF in September.

Asset management companies, banks, and other financial service providers which establish headquarters in the Dubai International Financial Centre (DIFC) are permitted to do business with locally-based high net worth individuals. DIFC Regulatory Authority chief executive, Phillip Thorpe explained in October, 2002, that although DIFC-based firms would not be allowed to enter into the retail market in Dubai, they will be permitted to deal with individuals whose net worth exceeds Dh5 million.

The DIFC has a separate set of laws, comprising a comprehensive set of regulations like company law, legislation on property rights, including laws on security and collateral, title to goods and securities, commercial transactions and contracts, and insolvency and data protection.

The Regulatory Authority issues rules to prevent money laundering, requiring a licensed institution in DIFC to appoint an appropriately qualified money laundering reporting officer.

In January, 2004, the Dubai Financial Services Authority (DFSA) announced that 12 new laws relating to operations within the Dubai International Finance Centre (DIFC) were now in place. Chief executive officer of the DFSA, Philip Thorpe explained that:

"The 12 new laws have been drafted by the DFSA to world-class standards, using the best examples of legislation from around the globe. They are clear and concise, and will provide certainty as to the rights and obligations of the financial institutions and other companies who will operate in or from the DIFC."

The laws (to which the DFSA has provided access on its website) are:

Regulatory Law;
Companies Law*;
Law on the Application of Civil and Commercial Laws in the DIFC;
Law Relating to the application of DIFC Laws;
Limited Liability Partnership Law;
Contract Law;
Insolvency Law;
Arbitration Law;
Data Protection Law;
Commercial Court Law;
General Partnership Law; and
Markets Law.

*now updated, see below for more information.

In April, 2004, a new federal law allowing financial free zones to be established in the United Arab Emirates (UAE) received the signatures of the Supreme Council, comprised of the rulers of each of the Emirates, and following its publication in the government gazette, came into force.

Chief executive of the DIFC, Naser Nabulsi observed that: "The Financial Free Zone Law recognises the unique nature and importance of the concept of the Dubai International Financial Centre. We are delighted that this law is now finalised."

He went on to add: "Its publication is great news for many of the world's leading financial services businesses who have endorsed the DIFC by applying for a licence to operate here or by issuing a letter of intent to apply."

Chief executive of the Dubai Financial Services Authority, Phillip Thorpe also welcomed the finalisation of the legislation, suggesting that: "This development is another step towards ensuring Dubai becomes a world-class financial centre, supported by laws and regulations of the highest international standard."

In July, 2004, The Dubai Financial Services Authority (DFSA) released a consultation document detailing proposed legislation to govern Islamic financial operations in the Dubai International Financial Centre (DIFC).

The paper called for comment on two new pieces of draft legislation: the Law Regulating Islamic Financial Business, which creates the regulatory framework for the conduct of Islamic financial business in or from the DIFC; and the Islamic Financial Business (ISF) module of the DFSA Rulebook, which sets out the requirements for an Authorised Firm undertaking Islamic financial business.

It also detailed amendments that will be made to other modules of the DFSA Rulebook as a consequence of the new Law and Module being enacted.

'The new draft Islamic Finance Law and Rulebook module are key components of the financial services legislation for the DIFC. Together with the specific prudential requirements already set out in our integrated prudential rules, they will provide a comprehensive regime for all aspects of Islamic financial business conducted in or from the DIFC', DFSA Chief Executive, Mr Thorpe explained.

Following the introduction earlier that year of Federal Decree No. 35, which specifically established the DIFC as a Financial Free Zone in Dubai, Sheikh Mohammed bin Rashid Al Maktoum acted decisively in July 2004 to guarantee the independence of the DFSA, giving his personal commitment to the independence of the DFSA and declaring that this will be formally enshrined in the Dubai Law which will signal the launch of the DIFC.

In his letter, His Highness said: "We hereby assure you of our strong commitment to the highest standards of transparency and of good governance throughout the DIFC. These standards are very important for the launch and for the continuing development of the Centre. Accordingly, we instruct you to secure these high standards wherever they are relevant in the DIFC. They include transparency and good governance in handling conflicts of interest (whether actual o