The U.A.E. is a leading commercial center serving the Middle East, Africa, and South Asia, with a significant portion of its import volume ultimately being re-exported. Dubai in particular plays a central role as a regional trade, logistics and tourism hub. Its economy has also been buoyed by ongoing construction and infrastructure projects in the lead-up to the Dubai World Expo 2020.
The U.A.E. offers a sophisticated, diverse market for western companies in many industries: best prospect sectors include: Oil & Gas; Energy (Nuclear and Renewables); Architecture, Engineering & Construction; Education; Defense; Safety & Security; Aerospace; Healthcare/Medical Devices; Automotive; and Consumer Electronics.
So uur focus and competence is on ICT, Life-Science & Pharmaceuticals, Automtoive, Machinery industry, Building industry, Chemical, Food industry and Alternative Energies. In these industries we have supported and executed various successfull Joint-Venture projects and market entries to the Middle-East.
A Joint Venture (JV) is a favorite choice for foreign companies wanting to enter the U.A.E. market or develop their existing operation beyond an agency or distribution arrangement. The JV agreement or contract of establishment regulates the obligations and respective entitlement of each of the partners. JVs are very common where it is impossible for a single contracting entity to execute the project alone, e.g., a local contractor and a much larger international contractor partnering on “mega” project. A JV is commonly formed either contractually or through the formation of a limited liability company under Federal Law No. 2 of 2015 (the Commercial Companies Law). As in all jurisdictions, choosing the right JV partner (s) is key to the venture’s ultimate success.
Under the Commercial Companies Law foreigners cannot own more than 49 percent of a limited liability in the U.A.E. outside any of the various free zones. There is no need to license a JV itself, although where a limited liability company is used to effect the JV, it may very well require licensing. Similarly there is no need to publish the underlying JV agreement. The foreign partner deals with third parties under the name of the local partner who, unless the agreement is publicized, bears all liability. In practice, JVs are seen as offering a suitable structure for companies working together on specific projects.
Licensing of manufacturing processes is also a growing market, especially considering the U.A.E.'s desire to increase the quality and diversity of local manufacturing. The total market for industrial licenses remains relatively small due to the limited manufacturing done in the U.A.E where industrial zones such as Jebel Ali and Khalifa Industrial Zone Abu Dhabi (KIZAD) hope to attract manufacturers by offering a range of incentives from free-zone status to the ability to use foreign nationals for 100 percent of their workforce, as well as some of the region’s cheapest utility costs.
When contracting with a partner to a JV, it is important to understand that unless the existence of the JV is disclosed, the only legal recourse that a foreign enterprise may have is against the partner with whom they have had dealings. The partner who actively conducts the business enters his name into the Commercial Register to obtain a trade license and is liable to the third party. If the existence of the JV is disclosed to the third party, the non-active partners also become liable, in which case the partnership is deemed a general partnership.