A new criminal offence for corporates that fail to prevent human rights abuses?
The United Arab Emirates (UAE) has an expatriate population of over 8 million and growing. In Dubai, driven by the employment and investment opportunities it has a British expat community representing over 12% of the population. A significant number of these expats have assets in the UAE as well as back home in the UK.
In the UAE, the laws of succession that will apply on their death will depend on whether a person is Muslim or non-Muslim. If a person is a Muslim, then Sharia law will apply. Under the 1985 Civil Code in the UAE, a non-Muslim can make a will in Arabic, which then needs to be translated and notarised. It is, however, up to the local UAE courts to decide whether or not to uphold such a will when the individual dies. As a consequence, this can lead to a great deal of uncertainty, cost and delay in dealing with an individual’s estate on death.
If an individual dies without a will, traditionally, the UAE courts have automatically imposed Sharia law on all estates, as embodied by UAE federal laws. Sharia law provides that a surviving wife who has children will qualify for one eighth of her deceased husband’s estate, and a surviving husband who has children qualifies for one quarter of his deceased wife’s estate. The remainder of the estate would be distributed among other family members. In addition, the UAE has no ‘right of survivorship’ concept under which jointly owned property can automatically pass to the surviving owner. As a result expat families of a deceased could end up facing a complex lengthy process, consuming significant money and time, as they navigate the aftermath of the death. Due to this uncertainty, individuals have been more reluctant to invest directly in Dubai and have tended to minimise assets by keeping cash offshore and holding real estate through offshore companies or entities rather that direct ownership.
As a consequence of these complexities, this made Dubai potentially an unattractive domicile for many non-Muslims, until now….
The Dubai International Financial Centre (DIFC) established a Wills and Probate Registry which launched in May 2015. As a result, any non-Muslim with assets in Dubai can now execute and register a will in English under the jurisdiction of the DIFC and its courts.
The key requirements are that; the individual is not a Muslim; is 21 or above; the will can only cover assets situated in Dubai; and the will is executed in accordance with DIFC requirements. A declaration that the individual is non-Muslim is made in the will, but this status will also be tested on death to ascertain whether the deceased converted to Islam after making the will.
The new rules broadly follow UK law and practice, create legal certainty for the inheritance of an individual’s assets after death and the appointment of guardians for their children. This not only allows individuals to have testamentary freedom to dispose of their assets as they wish, it also provides peace of mind that an individual’s estate will be distributed according to their wishes.
Upon the testator's death, the executors will apply to the DIFC Wills and Probate Registry for a grant of probate. As the grant is issued by the DIFC Court, it will be directly enforceable in Dubai without the need to go through the Dubai courts (to decide on the merits) and the resulting uncertainty this brings. The introduction of the new DIFC Wills and Probate Registry is a great option for non-Muslim expats to ensure their Dubai property passes to their chosen heirs as per their wishes. Since its launch in May 2015, over 1000 wills have been registered and 20% of those are from British expats.
Although the DIFC will covers assets held in Dubai, it will not cover assets held anywhere else in the UAE or the world. A person resident in another part of the UAE will still need a separate will in Arabic as referred to above. If a non-Muslim person, for example, had assets in Dubai, Abu Dhabi and the UK, it may well be that three separate wills in each of those jurisdictions would be needed.
Without a UK will, an individual could face their UK-situated assets being distributed in accordance with UK intestacy rules rather than their intended wishes. It is therefore imperative for individuals to take advice and to consider having in place separate wills to deal with UK assets and UAE assets. A UAE will cannot deal with UK assets and vice versa.
The UAE is the first jurisdiction in the Middle East where non-Muslims can make a will under international-recognised Common Law principles. A few other common law jurisdictions such as Malaysia, Hong-Kong and Singapore also have similar provisions to deal with the estates of Muslims and non-Muslims distinctively. Will this system catch on? Can we expect other regions in the UAE to implement the system? There does not seem to be any current indication that other UAE states will do the same, however, it is apparent that the DIFC has been popular in Dubai and its success may prompt other states to consider their position.
The DIFC has now registered over 1000 wills under the new system and has a steady flow of new wills being registered every month. What does remain clear is that every individual should not neglect the assets they continue to own in their home country, to ensure they will be dealt with on their death in addition to the assets they have acquired in Dubai which should be dealt with separately. Expats should ensure they take appropriate advice to ensure their worldwide assets are dealt with appropriately.
A number of partners at Kingsley Napley frequently travel to the UAE to support clients and meet with experts and professional advisors. Should you wish to discuss any of the issues covered in this blog, please contact Matthew Duncan.
Partner and Head of Department
Skip to content Home About Us Comment Services Contact Accessibility