Legislative Change in the Retail and Consumer Sector

UAE legislature issued new legislation on Retail and Consumer, on 10^th October 2022. This change was being awaited for a long time and it came in 2022, last year. The legislations are; Federal Decree Law 50 of 2022, which is for Commercial Law (Commercial Transactions). Federal Decree Law 35 of 2022, for evidence in Commercial Transactions. These laws were enforced on 2^nd January 2023. These new legislations replaced the old legislative laws with new and immediate effects.

Articles 468 and 497 speak about, the Commercial Transactions of Islamic Finance. It is for managing the advanced developments in ISLAMIC FINANCE. ISLAMIC Financial Institutes are not allowed to lend or borrow money with interest, because this is against the SHARIA Law. Any such charges like interests are also prohibited as per Sharia Financial Rules, therefore Islamic Institutes are not allowed. The claim described by this rule is not more than the direct expense and original amount. The Commercial Law selects the requirements for MURABAHA, ISTISNA, SALAM, and IJARAH Contracts. It can be discussed further in details with our Lawyers and Legal Consultants.

Article 495, was one of the articles that put criticism on it. It deals with liability for defects relating to the property where the lease agreement is involved and the property is leased to ISLAMIC BANK (Lessee). The Islamic Bank has to inspect property, to make sure that there is no defect to property. Lessor has to pay the basic cost of maintenance, and the insurance cost. Insurance we all know is for covering damages, natural losses etc. Any agreement in which such costs are shifted on the lessee will be considered Null and Void. But Islamic Institutions have to check the status of the property. Check more with our Advocates this regard.

Commercial Law needs to take reasonable security against loans. Article 409, is for all the banking facilities, including retail and corporate. It contains enough security. But Decree Law 23, 2022 which is amending Law 14 of 2018, which also came into being 2^nd January 2023. The new Article 121 of Banking Law, is for sole proprietorships and individuals. In difference, it is applicable to Sole Proprietorships and Individuals. Additionally, the execution will be restricted to enhanced protection.  About Bank Facilities, for the implementation of the execution process, ABU DHABI judicial department explanatory circular 3, 2023 which is connected with circular 9, 2022, restricts the execution of security accepted by these institutions.

There is an age restriction to start trade activities. Previously it was 21 and now it becomes 18. The age has been reduced now. A Minor if he has to manage or start the trade, in certain conditions, can start, at the age of 15, but he needs to get approval from Economic Ministry or he has to conduct his trade activities on the rules specified by Cabinet Resolution.

The statute of limitations for commercial claims has also been reduced to Five (05) years, from the date debt is started.

This law allows litigants to be agreed on specific rules of evidence if the agreement is written and not conflicted with Public Order. New evidence is private customs, public customs, electronic evidence, cross-examination, document protection, and more.