UAE Law: Choice of governing law and jurisdiction

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This is especially obvious with regards to worldwide business transactions.
Contracts are closed between two parties sitting in two different parts of the world and without meeting each other vis-a-vis. In view of that, more accentuation ought to be placed on the private international legal framework of the states, guaranteeing that they don't stale and are up to international guidelines in managing issues that constantly emerge in International businesses.
As cross-border transactions constantly arise, a pertinent issue naming "choice of law" holds significant importance in the private international law applicable to international commercial agreements. Contracts are mere pieces of paper without any legitimate impact unless a specific reference to some private law is given which characterizes the commitments expected by the parties to the agreement and the recommends the way of redress through the appropriate court system in case of failure to perform contractual obligations.
A governing law provision in any commercial contract defines the law which will govern or regulate the contract in the event of a dispute, as opposed, jurisdiction clause specifies the courts or international institution that will have exclusive jurisdiction to try the matter or resolve disputes. These clauses are though equally important as that of the commercial arrangements between the parties; they are yet neglected amid drafting the general terms of the contract and are considered as standard boilerplates at the end of the contract.
It is vital that these conditions gain as much importance as the substantive arrangements of the agreement. Failure of parties to agree on the governing law can lead to expensive and massive suits deciding the relevant law and jurisdiction to be applied to the agreement. Corporate Lawyers of Dubai assist numerous multi-billionaire companies to have tailor-made commercial contracts prior to entering into an agreement which suits the requirements of both the parties.
Choice of Law Provision The decision of governing law for the contract is one arrangement in the contract where the parties assign the law of a particular jurisdiction to oversee and regulate the disputes merging between the parties. A such, the parties indicate or stipulate that any claim arising out of the contract will be resolved by the law of a concerned jurisdiction.
This decision generally becomes binding on the parties when the parties refer the matter to arbitration. A significant number of parties, according to statistics of the International Chamber of Commerce, involves governing law in their contract.
A standard governing law clause states that "this law of this country shall govern the agreement". There are several preconditions which must be considered prior to choosing a particular which are detailed as below: Worthiness of the Law for resolving dispute:   Jurisdiction Provision Another most common uncertain clause is to determine the jurisdiction where the word "may" and "shall" can bring unwanted confusion.
Importantly, if parties which to have a non-exclusive jurisdiction the word "may" can be utilized, on the contrary for an exclusive jurisdiction the word "shall" should be used. An ideal jurisdiction clause states that "the parties shall/may submit their dispute emerging out of or in connection with the concerned agreement to (court /arbitration) of this country." A bare review of the foregoing standard jurisdiction clause we note that the first step is to determine which institution shall be given authority to resolve the dispute that is either courts or arbitration institute.
Both the system have their pros and cons, hence parties should beforehand determine what should be appropriate for the said matter. It most certainly believed that arbitration offers wide variety of options and advantages over courts which are outlined as below: UAE Law and Choice of Law In UAE international parties may face needless issues regarding the application of foreign law to govern the contract.
As in certain cases, courts inherit the jurisdiction and governs it according to the UAE local laws such as Civil Transactions Law or Civil Procedure Code. In addition, the courts of UAE will not let go jurisdiction to another court over a matter where UAE courts will in all case have the jurisdiction.
This is can be witnessed in the following disputes: In accordance with the above, if the UAE courts will inherit the jurisdiction, the governing law will be the law of UAE itself. Accordingly, the court will strike down the governing law and jurisdiction clause in the agreement.
What do we learn? What if there is no governing law and jurisdiction clause in a particular contract? Before the parties get an opportunity to determine the dispute on merits, the parties will have to exclusively determine the courts or law that will govern the contract, which is an expensive and cumbersome decision. The non-presence of governing law and jurisdiction clause confuses the parties to determine if there is a dispute or not and leads to unfavourable decisions.
Source: Free Articles from ArticlesFactory.com Dr. Hassan Elhais, has made a name for himself as a renowned specialist in the fields of Family law, civil law, company incorporation, construction law, maritime law, banking law, criminal law, inheritance law, and arbitration.
He and his team in Dubai and Abu Dhabi cover the entire UAE and provide sound and accurate legal advice. They maintain the highest standards of integrity, confidentiality, and discretion.
Dr Elhais' goal is to ensure that a consistently high standard of service is undertaken and delivered by his team..