Regional Updates

The UAE is one of the largest recipients of foreign direct investment in the world and is attracting an increasing amount of international capital to sectors such as real estate, finance, infrastructure and technology. 

However, the landscape within which businesses operate today is far more complicated than just a few years ago. International supply chains are shifting; geopolitical events and changes in regulation in various countries are contributing to an ever-increasing complexity for businesses to manage and mitigate their risk when making decisions regarding the protection of their assets.  From a legal standpoint, some patterns of thinking among companies and investors are beginning to emerge in terms of capital protection.

• The first pattern is an emphasis on structuring investments across borders.  International investors are using multi-jurisdictional corporate structures to isolate operating risk from asset ownership. Such structures may include holding companies in stable jurisdictions, shareholder agreements and governance mechanisms that protect minority shareholders.
• The second pattern relates to the increasing importance of developing comprehensive contractual frameworks for all types of investments and commercial transactions.  Whether related to real estate, joint ventures, cross-border commercial contracts, etc., the quality of the legal documents forming the basis of any transaction will be critical to protecting capital. Clarity surrounding governance, investor rights, exit mechanisms and dispute resolution will significantly contribute to reducing the risks associated with the complexities of large-scale projects.
• A third pattern relates to the inclusion of dispute resolution planning into the overall plan for capital protection.  With the increase in international transactions, companies are becoming increasingly aware of the importance of including arbitration clauses, governing law provisions and enforcement issues in their contracts. Dispute resolution mechanisms that are properly structured will provide certainty and minimize the potential for costly and time consuming jurisdictional disputes should any disagreements occur.

Due to the sophisticated legal system, the strong finance industry, and its location which allows for connectivity with other parts of the world, Dubai has become a centre for companies seeking to mitigate these risks.

In addition, the UAE is continuing to develop its status as a hub for connections between Europe, the Middle East and Asia, and therefore, many companies are using Dubai as an office to create structures for both regional and/or global investments and commercial relationships involving multiple countries.

Thus, it is likely that the best investors in this environment will be the ones who are proactive about protecting their capital rather than waiting until a problem develops; a solid legal structure from the outset of a transaction can help to prevent disputes, reduce operational risk, and provide for the preservation of investment value throughout the duration of the transaction.

As international trade and investment pathways continue to evolve, there will always be a need for asset structuring to maximize commercial flexibility and security for all companies operating within the region.

The Spencer West Middle East office offers ongoing counsel to business owners, developers and investors concerning the structuring of cross border transactions, investments and joint ventures in the Middle East, Europe and South Asia.

Please do not hesitate to contact us if you require guidance regarding capital protection or investment structuring in the region.

Email: [email protected] 

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